Question

Sally Invests Part 1​:

Assume that 1 year nominal interest rates on U.S. government securities are 3​ percent, and 1 year nominal interest rates on U.K government securities are 5 percent. Consider an investor named Sally who has​ $1,000 in USD to invest in U.K. government securities for 1 year. Assume that the spot rate today is​ $1.550 USD per GBP. How many GBP would Sally receive today for her​ $1000 when she converts it to​ GBP? ​ (Note: GBP​ = Great Britain​ Pounds)

A. 635.22

B. 645.16

C. 799.05

D. 1550.00

Sally Invests Part 2​:

If Sally invests those GPB from​ "Sally Invests Part​ 1" for 1 year at​ 5%, then converts the GBP proceeds back to USD at the future spot rate of​ $1.450 USD per​ GBP, how many USD will she​ receive?

A. ​$2247.50

B. ​$1068.97

C. ​$928.26

D. ​$982.26

Sally Invests Part 3​:

If Sally invests those GPB from​ "Sally Invests Part​ 1" for 1 year at​ 5%, then converts the GBP proceeds back to USD at the future spot rate of​ $1.650 USD per​ GBP, how many USD will she​ receive?

A. ​$1,111.74

B. $1,011.99

C. ​$997.22

D. ​$883.34

THEY ARE ALL RELATED AS ONE QUESTIN.

Answer 1

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

LAST ANSWER = 1117.74 AND ANSWER GIVEN IN OPTION IS 1111.74, S0 MIGHT BE PRINTING MISTAKE